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- [00:03]
Alan Cooper
This is a branded podcast from Latitude Studios.
- [00:07]
Stephen Lacy
Many successful companies have been started by friends. Ben and Jerry's Apple, Harley Davidson, and in the case of Alan Cooper and Ricardo de Acevedo. Their partnership began in a third grade classroom in Venezuela.
- [00:19]
Alan Cooper
So Ricardo and I actually have been best friends since elementary school. We met in the third grade in Caracas, Venezuela, where we were both originally from.
- [00:28]
Ricardo de Acevedo
We go way back.
- [00:29]
Alan Cooper
We're business partners from the very, very early days. We started throwing parties when we were 15 years old that people apparently still remember, so that's a fun fact.
- [00:38]
Ricardo de Acevedo
We didn't actually make a lot of money. We called it the biz club.
- [00:44]
Stephen Lacy
Alan and Ricardo have come a long way since their first venture as teenagers, from throwing parties to co founding the storage integration company On Energy. And as they told Steve and Lacy, they're now working to solve one of the most critical power challenges of the AI age.
- [00:57]
Alan Cooper
Basically, we're offering like the dispatchable data center.
- [01:00]
Unknown
Was there a dynamic between you that still stays today?
- [01:03]
Ricardo de Acevedo
We just like, jive well together. We're both very easygoing, and the business mind and the hunger and ambition that we both have, we've always been aligned in that sense.
- [01:15]
Alan Cooper
And then I think Ricky and I both blend together like high ambition, low drama, which surprisingly don't go together that often. But I think that's been a secret to the partnership.
- [01:24]
Stephen Lacy
Alan is the CEO of On Energy. His father was an entrepreneur in the oil and gas industry, and Alan followed him into the energy world. But after riding the volatility of the oil market, he started exploring something more aligned with his passion.
- [01:37]
Alan Cooper
In 2015, during sort of a lull in activity in oil and gas, I decided to really pursue my passion in renewables and in sustainability and met up with Ricardo, who'll tell you the rest of the story.
- [01:49]
Stephen Lacy
Ricardo is ONEnergy's CTO, and he had taken a very different path from Alan after graduation. He landed on Wall street just in time for the 2008 financial crisis starting at Lehman Brothers, weeks before its collapse.
- [02:02]
Ricardo de Acevedo
From the beginning, I knew Wall street wasn't it for me. So I moved to Miami and I decided to go back to school, get my master's in electrical engineering. And I did my research and my thesis in microgrid control systems. At that time, I was finishing my master's. Alan was going through the down cycle in his business. He reached out, he was like, what's up with batteries? Like, what's the next big thing? And he actually hired me for like a little research project. And in that exercise, we identified the peak shaving trend that was going on in California with STEM and Green charge networks. Advanced microbup solutions.
- [02:39]
Stephen Lacy
Their idea was simple. Take what was working in California and bring it to Latin American markets with high electricity demand charges. In 2016, they started deploying battery systems in Peru and Mexico where industrial customers were paying steep premiums for their peak power consumption.
- [02:55]
Ricardo de Acevedo
Solar was already getting saturated or really we didn't see any space to innovate or really add value. But really the missing piece is energy storage. So we then found that Peru had the highest demand charges in Latin America. In a micro sense, energy storage was making sense behind the meter. And in a macro sense it was like, this is coming, this is the next big wave.
- [03:32]
Unknown
But suddenly you go to deploy these systems and you don't have any of the off the shelf components that you need. How did you start to build these systems from scratch?
- [03:42]
Alan Cooper
Reluctantly, yeah.
- [03:45]
Ricardo de Acevedo
We were like phoning Tesla and Fluence and LG and the big players and we weren't getting the time of day. We found that there wasn't really a off the shelf solution that we could plug and play into the opportunities we were finding. And Alan was building, had built SCADA system, Supervisory Control and data acquisition system for the oil and gas side that we then decided to basically adapt for energy storage systems. And that's where my academic research came in. How do you take data and simulate and model and then apply from laptop to field proven technology? And we were able to do that initially for very small systems, 30 kilowatt systems we started and then scaled up from there.
- [04:43]
Unknown
So once you started picking up these repeat customers, they came to you and started asking you about what you could do about power quality issues. How did that influence your trajectory and your technology development?
- [04:55]
Alan Cooper
We had a customer come to us with a problem at a facility that they were having five blackouts a week. They were really like lighting their hair on fire. And you can really tell the difference between a sales call where somebody needs action immediately versus like the ninth follow up. And I think for both of us, we were taken aback. Like this is absolutely a problem that we want to take on and that seems to be monetizable not only here, but sort of everywhere. And so that's when we really started digging in, not just to creating the solution which we couldn't find in the market, but really building some intellectual property around that solution and starting to roll it out at scale.
- [05:33]
Ricardo de Acevedo
And that's when it really clicked that this again, the solution was not available off the shelf. And we saw an opportunity to build some intellectual property and some proprietary solutions of hardware software integration. And that's when we came up with our UPS on uninterruptible power supply plus peak shaving concept. So it's a UPS that can charge and discharge on command and basically it's a industrial UPS that pays for itself. And that's when we gained a lot of traction and in this particular sector or segment of the market. And now we're deploying six medium voltage UPS microgrid solutions. With this client we built something that wasn't available in the market because our clients were asking for it.
- [06:30]
Stephen Lacy
This week, the role of batteries for critical AI infrastructure. In this episode produced in partnership with One Energy, Stephen Lacy talks with co founders Alan Cooper and Ricardo de Acevedo about the company's approach to enabling resilient grid interactive data centers with storage on energy has grown into an integrated projects company. It does everything from designing and building systems to writing the software that controls them. The company has deployed 67 projects across six countries with systems ranging from small commercial to utility scale. And as Alan explained, one energy sweet spot is 5 to 100 megawatts with 2 to 4 hours of storage.
- [07:10]
Alan Cooper
And we really like to play that sort of buffer at the distribution level between utility and end customer. We have a plethora of CNI customers, large industrials, critical infrastructure who want to take control of their own destiny, put in energy solutions that they either own or we own them and provide resiliency and savings in that capacity.
- [07:33]
Stephen Lacy
This brings us to the most urgent challenge they're tackling data centers for artificial intelligence. What makes these data centers a challenge for the grid isn't just their size, it's their volatile power usage. Power demand at these facilities can spike or drop drastically, almost like a town or small city appearing and disappearing every few minutes. Our electrical grid was never designed for this kind of volatility. Meanwhile, getting a new data center connected to the grid can take years. And in the fast moving world of AI, years might as well be centuries. Steven Lacy recently sat down with Alan and Ricardo to explore how One Energy's new battery platform could help alleviate these challenges. Making data centers better grid citizens while ensuring they get the power quality they need.
- [08:16]
Unknown
So this is a good place to talk about how UPS systems work generally and what differentiates this system. So walk us through why this is so different than a traditional UPS system.
- [08:26]
Ricardo de Acevedo
Right? So most people will be familiar with UPS's from your computer, you know, little box by your computer that when, whenever the, the lights go out, the computer is Backed up and you don't lose your word document. This is the same concept, but blown up in industrial scale. So the way UPS works is that it, it takes the alternating current from the grid, converts it to DC with the battery, charges the battery, and then an inverter that converts the DC current to AC current, so it feeds the load as if it was the grid. So blowing up the concept into an industrial sense, we're doing that, but we're pairing it with advanced controls so that we can control the charging and discharging of the battery. Because basically, traditionally UPSs are just waiting for an outage to discharge the battery. But if you add controls, you can discharge the batteries whenever you want for peak shaving, energy arbitrage, ancillary services. Now we took this concept a step further and implemented it in medium voltage. The idea is that we're intercepting the whole power feed to the whole facility at medium voltage. So the utility will typically give you the power at medium voltage and then you step it down to your facility. So we're intersecting the utility feed and backing it up with a double conversion, uninterruptible power supply. So double conversion is the state of the art. Basically, it's the highest reliability you can get because it is decoupling the grid from the load through this, you know, what they call the rectifier AC to DC and the inverter DC to ac. Now, we're not only doing that with traditional UPS power electronics, we're doing it with the latest generation battery bidirectional inverters. So now you're having on the grid side, what you call a grid following inverter. You can, you know, charge the battery, but also you can discharge the battery towards the grid or provide ancillary services, frequency regulation, or whatever the grid needs. If you take out the grid and you put in a turbine, you can also provide services like firming to that turbine. Now you decouple it with the DC bus where we're putting longer duration. So typically UPSs will last from 5 to 15 minutes. Here we can do 15 minutes or we can do 4 hours. So now we're decoupling the grid from the load and putting longer duration. So it gives you all this flexibility that was never available before.
- [11:19]
Unknown
Okay, so then what does that allow you to do? What are the spectrum of options that a critical facility has in front of it?
- [11:25]
Ricardo de Acevedo
With this system, the value proposition for mission critical facilities and data centers that fall into that bucket is that we're bringing the UPS that is traditionally indoors and Right next to the compute. But we're taking it upstream. Right. Like I said, we're intersecting the whole medium voltage feeder and outdoors. So we're freeing up that indoor space because it's upstream, it's backing up the whole facility, not only the compute, but the cooling and mechanical loads too that have become critical. These latest generation AI data centers that are running more and more power per rack and they're actually running liquid cooling for these chips. And that cannot fail. So you're solving that problem already. Another of the big problems that AI data centers are having are the volatile ramp rates of these compute loads. Because in the training and in the inference, the GPUs are ramping up and ramping down periodically.
- [12:32]
Unknown
Right. This could be hundreds of megawatts in seconds.
- [12:35]
Ricardo de Acevedo
Yes. Which is insane. Right. So we actually are discussing with a client that is developing a thousand megawatt facility and they were telling us the load swings are going to be 40% or 400 megawatts every 10 seconds. And it's not like a low, a slow ramp, it's not a five second ramp, it's an instantaneous ramp up and then an instantaneous ramp down every 10 seconds. So you're moving 400 megawatts. The grid is just not designed to handle that. So that's where the decoupling of the load and the grid or whatever, micro grid or on site generation, that's the key. So your energy storage, your DC bus is the buffer. We're able, with the grid following to maintain a constant draw from the grid or the onsite generation and then have the grid forming towards the data center handle these volatile ramps. So the grid is none the wiser, it doesn't know what's going on and vice versa. Whatever happens on the grid, the data center doesn't know what's going on. So if you have a blackout, a flicker voltage, swag or swell, the load is completely protected in the grid.
- [13:53]
Alan Cooper
We don't really have an energy problem. There's not an energy availability. Energy is abundant. What isn't abundant is capacity and the distribution and transmission networks required to meet maximum loads at the points of maximum strain. And if you track back to our original projects from Peru, all the way through Mexico, even the stuff that we're doing in Texas and now with data centers, it's always tried to solve that same distribution level capacity constraint problem, which is monetized in different ways. But here with this medium voltage UPS solution, basically what it does is you have, from the utilities perspective, you have a data center who is a dream customer 98% of the time and an absolute nightmare in the 2% of the time when the grid is its maximum strain. And if you have a dispatchable data center, which basically means that they can curtail their load consumption for 2, 4, 6, even 8 hours while the rest of the market and consumers are riding through a winter storm or a very hot summer day, then they become the perfect customer. It's a high paying customer that brings total cost of energy down for all consumers and is paying for their fair share of the infrastructure that they require to consume these massive amounts of power and do it in a way that's safe for everyone.
- [15:14]
Unknown
A lot of these companies are getting much more creative with they're building out sophisticated power teams, they're getting creative in contracting, they're trying to scale really quickly and evaluating a lot of different technologies. What are the types of data center developers that you're talking to working with and do you feel like that creativity is a real opening for this medium voltage UPS solution?
- [15:39]
Ricardo de Acevedo
One of the challenges that we're seeing is that the traditional data center developer is going to follow the spec right of their client or their tenant and the majority who's driving the spec are the hyperscalers. So really what we're seeing is that the hyperscalers, Google's, Amazon's metas, are already thinking about this because they're already having trouble interconnecting to the grid. The speed to power is basically the largest issue that they're facing. The creativity is by necessity. Right now they're looking for creative solutions to an industry that is very slow moving. Right. And that's where the nexus of the utility plus the flexible data center loads makes a lot of sense because the utility side is flooded with load interconnection applications and the data centers just want to move quickly. So this technology and this flexibility is really allowing them to interconnect faster and not affect the grid in a negative way. Right. And actually become an asset to the grid and make the grid more reliable.
- [17:03]
Unknown
Theoretically, this allows the data center to offer more grid services. So what is their possible revenue opportunity for the data center itself?
- [17:11]
Ricardo de Acevedo
Right. So depending on the market, there are demand response programs, there's peak shaving behind the meter, there's energy arbitrage, and then there's also even ancillary services that you could participate in ERCOT pjm. In short, the answer is the revenue depends on the market. But we're seeing, for example in ercot, where we're installing systems in front of the meter for IPP business, you can participate in the 4CP program, the 4 coincident peak program. So it's basically peak shaving, but it's a coincident peak demand similar to what we already did in Peru. The payback is attractive.
- [17:51]
Alan Cooper
I would even frame it a little bit differently and again less from a bottom line perspective in terms of what is the additionality of revenue that these programs can produce. But really what we're trying to solve here is also a fundamental bottleneck in the growth that data center developers and hyperscalers have in their ability to connect the entire universe through AI. Currently this power hungriness of data centers has become top of mind across the world. Even though energy is not an enormous cost function within the operation of a data center, I think I saw a statistic that it was less than 10% of total opex, not to mention the capex. The reality is that speed to interconnection and the cost of energy are the fundamental drivers of where these data centers are gonna pop up and are a fundamental limiting factor to how quickly we can bring these systems online. And so I think really it's more about shifting to the top level problem, which is how do I help you interconnect faster, how do I help you secure perfect power quality and have the most reliable data center on the market? And I think that's really what we're trying to focus on. The return on investment through itc, our ability to provide financing for these solutions as an energy, as a service product, to integrate other energy generation assets even, that's all almost secondary, right? The objective is how do you connect more data centers at the cadence that you promised your shareholders you would.
- [19:27]
Unknown
Batteries are just this amazing, versatile solution. I'm wondering if you think about a few years out what your vision for batteries are on the grid as this Swiss army knife that can solve so many different problems for customers. Are we going to be using them now for things that we aren't currently using them for?
- [19:48]
Alan Cooper
My feeling on applications is that many of them have been pretty well proven and that this industry is moved not by what the technology can actually do, but rather what it's being paid to do. And I see perhaps even more important than the technical innovation that still has to occur and surely will. What I see is from a regulatory perspective, do more markets, add in the necessary market signals so that the batteries are paid to provide the services that the grid needs at that particular point. And I think where we've seen this technology been massively successful is because that regulatory framework has been extremely rough, robust and well built and where it hasn't really taken off at all. It's largely because that's there's a vacuum, not because there's a vacuum of value, but there's a vacuum in how things are being remunerated.
- [20:44]
Ricardo de Acevedo
I think we're at the hockey stick moment of applying the technology at scale and having the industry, the utilities, the customers really being comfortable with the technology. The investors, obviously a big part of what was missing when we started. We were laughed out of the room, out of many banks when we were looking for financing and investment in this technology because it was so immature, so premature. Right. But the momentum is unstoppable and we're really at that inflection point, I feel.
- [21:19]
Unknown
Ricardo Alan this was so much fun. Thank you so much.
- [21:23]
Alan Cooper
Awesome to be with you, Steven.
- [21:26]
Stephen Lacy
This episode was produced in partnership with ONEnergy1 Energy delivers turnkey resiliency solutions for utilities and enterprise customers. Whether you're managing data centers or local grids, they'll help bring storage to your fleet. Learn more at On Energy.